Can an employer change a 401k plan to make it worse without notice?
I have been at my current employer for three years as of March 2020. As per my 401k I am to be 100% vested at year three.
Today, 11/24/19 I received notice that the vesting schedule has changed to be vested after 6 years of service. This notice says this change applies to the 2019 year. This is the first time the vesting schedule change has been brought to my attention. It is particularly concerning as my company chose to send it to me via email, as the close of the 2019 year while I am actually on vacation.
Is this legal? I have read through the IRS website on 401k and see it is legal to change vesting schedule but there is a cut back amendment.
However, I can't find any information regarding notice.
Any help would be greatly appreciated.
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This is my understanding:
By law, companies are required to vest a company match using a graded or cliff plan. If they use the cliff plan, they must vest no slower than 100% at 3 years (this is apparently what you previously had). If they use the graded plan, they must vest no slower than 20% each year, starting after 2 years.
So, the good news is, if you leave tomorrow, you are vested at 20%.
They can't take away vesting, so anyone who was 100% on the old plan, will remain 100%.
If you might leave before 6 years, you should consider consulting an attorney. But, I would guess that you would not be successful, the amount of match is a bonus, not a guarantee. Companies can cut back the amount of the match (mine did), or eliminate it altogether. Read the fine print of the match plan to be sure.
www.research401k.com/401k-vesting.html
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